CONCEPT OF INPUT SERVICE DISTRIBUTOR IN GST

Goods and Services Tax - GST - By: - Anuj Bansal - Dated:- 12-3-2018 Last Replied Date:- 13-3-2018 - An Input service distributor (ISD) is an office of supplier of goods or services which receives tax invoices for services and distributes the credit in such invoices to its branches having the same PAN in the manner prescribed under the law. However, in order to distribute credit, following conditions are required to be followed: The credit can be distributed to the recipients of credit against a .....

above provisions, following procedure to be adopted: The credit of tax paid on input services attributable to a recipient of credit shall be distributed only to that recipient. If the input services are attributable to more than one recipient of credit, the distribution shall be on the pro-rata basis of the turnover of such recipients in the state / union territory during the relevant period. However, if the Input services are common for all units, then it will be distributed according to the ra .....

ed by the amount of any duty or tax levied. relevant period - means - If the recipients of credit have turnover in their states during the FY preceding to the current FY, the Preceding FY; or If some or all recipients do not have any turnover in their States in the FY preceding the year during which the credit is to be distributed, relevant period will be the last quarter for which details of such turnover of all the recipients are available, previous to the month during which credit is to be di .....

ving turnover in the previous year i.e. 2016-17 nor in the Q.E. Dec, 2017, but during the Q.E. Sept, 2017, turnover was there in all the units, therefore, turnovers for Q.E. Sept, 2017 shall be considered for computing the ratio. Ratio of distribution of ITC by ISD: As stated above, where the input service is directly attributable to a particular unit, the credit has to be distributed only to that unit. If input services are attributable to more than one recipient of credit, the distribution sha .....

nner: Location of Branch (recipient of ITC) Manner of Distribution of Credit Same state as that of ISD The credit of IGST, CGST, SGST or UTGST shall be distributed as IGST, CGST, SGST or UTGST respectively. Different state as that of ISD The credit of IGST, CGST, SGST or UTGST shall be distributed as IGST. Input Service Distributor Invoice / Credit Note for the distribution of credit: The document prescribed for distribution of credit is Input Service Distributor Invoice . Moreover, the details .....

as- , / respectively, and any combination thereof, unique for a financial year. Date of its issue. Name, Address and GSTIN of the recipient i.e. the person to whom the credit is distributed. Amount of the credit distributed: Eligible and Ineligible Credits shall be indicated separately. Amount of IGST, CGST and SGST shall be mentioned separately. Invoice shall be signed or digitally signed by the Authorized Signatory. It shall be clearly indicated in such invoice that the Invoice is issued only .....

to the output liability of recipient. Services taken under RCM The ISD is not permitted to make payment of tax under RCM. Therefore, in a situation where the ISD is taking services which are taxable under RCM, it is suggested that either take a normal registration and take services in such registration and pass on the credit to ISD by raising an invoice on ISD. The other option is that the company can take such services in other existing normal registration and pass it on to ISD. Thereafter, the .....

ay include these in its GSTR-2 and take credit. An ISD shall not be required to file Annual return. Amount of tax credit distributed should not exceed the amount of tax credit available with the ISD as at the end of a relevant month to be filed in GSTR-6 Tables 6, 7, 8, 9 of GSTR-6 facilitate to amend any mistake committed in previous returns regarding furnishing original invoice details, mismatch, and redistribution of amended credit. EXAMPLE: ABC Ltd, having its head Office at Delhi, is regist .....

Now suppose, Mumbai unit was not operational in the FY preceding the current FY i.e. in 2016-17 and it came into existence in July 2017. Also, there was no turnover in Gurgaon unit for the quarter October 2017 to December 2017. However, all the three units have their turnover details for the quarter July 2017 to September 2017 which is as follows: Unit Turnover (Rs.) Total Turnover of three units = ₹ 5,00,00,000 Turnover of Delhi unit = ₹ 2,00,00,000 (40%) Turnover of Gurgaon unit = .....

0,000 GST paid on services used only for Delhi Unit. 5,00,000 5,00,000 - IGST, CGST & SGST paid on services used in all units: Distribution on pro rata basis to all the units which are operational in the current year 20,00,000 8,00,000 5,00,000 7,00,000 On the basis of above, it would have been observed that compliances under ISD requires great efforts like maintaining credits, mismatching of credits, distributing credit, issuing Input Services Distributor Invoices, etc. Moreover, the determ .....